The way electricity tariff has risen in
the country over the years often confuses the analysts. Some of the experts are
of the opinion that tariff hike has only proliferated electricity theft. They
also say that the successive governments have failed in resolving power crisis
but the performance of the present government is most deplorable. The lingering
power crisis is not because of reduction in generation capacity but only due to
mismanagement. On top of every thing, constant blurring of politicized
statements creates more confusion than providing any sustainable solution.

It is true that during the last one
decade price of crude oil has skyrocketed to high US$147/barrel but it is not
the only cause of tariff hike, it is mainly due to rampant power theft and
non-payment of bills by government, semi-government and autonomous bodies. While
the utility companies just cannot disconnect supply to most of the defaulting
entities, mounting circular debt has also affected operations of IPPs.
Transmission and distribution (T&D) losses mostly comprising of theft have been
lingering around 40%. Instead of utility companies overcoming this issue, they
have been resorting to tariff hike. Ironically, the government has been
condoning this gross mismanagement - to be precise rampant corruption ñ by
allowing tariff hike. Even the National Electric Power Regulatory Authority (NEPRA),
given the mandate to protect the interest of all the stakeholders of the power
sector has been protecting the interest of only one stakeholder, utility
companies.

Experts are of the opinion that
electricity theft goes on only because of the corrupt employees of the utility
companies. It is a strong ring of operators, which have become a monster and
even the top management appears helpless. New connections are refused on the
pretext that 'demand exceeding supply' but official kundas are encouraged in the
name of temporary connections. It may also be remembered that these official
kundas are on top of unofficial kundas operating under the patronage of the
corrupt employees of the utility companies.

The quantum of theft is evident if one
looks at the periodical reports. In case of KESC, the number of units billed is
almost equal to the number of units generated by the utility and whatever
quantum is purchased from IPPs and PEPCO goes straight towards T&D losses. This
persistent and significant hemorrhage turned the KESC virtually insolvent and in
an attempt to ensure minimum supply the successive governments have been
injecting billions of rupees annually. Various restructuring efforts and even
its privatization and injections of billions of rupees by the new management
have failed in improving the financial health of the company. It is necessary to
clarify that PEPCO faces even more precarious situation.

While Punjab and NWFP enjoy the
advantage of hydel power, costing less than a rupee as cost of generation KESC
is entirely dependent of thermal power generation be its own or bought from the
IPPs. The government has never passed on the advantage of low cost hydel
generation to Karachi, the hub of all the industrial and commercial activities
and also having a population of nearly 20 million or more than one tenth of
country's population. Since average cost of power generation at KESC is much
higher as compared to PEPCO, it certainly deserves subsidy to keep the tariff
comparable with the tariff being charged by DISCOS operating under the umbrella
of PEPCO.

Another, but most important factor
responsible for persistent hike in electricity tariff is declining share of
hydel generation in overall electricity production. It was not a distant past
when the hydel share was more than 60%, which has reduced to about 25% now. It
is mainly because Pakistan failed in constructing hydel generation facilities
and under the dictation of international lenders, IPPs mostly based on fossil
oil have been established. However, blaming the international lenders may not be
right because they are also driven by the policy of inducting private sector in
power generation, transmission, and distribution. It is true that the tariff
being charged by the IPPs is high but distribution companies have to accept that
if T&D losses are contained to less than 10% for PEPCO and less than 5% for KESC
substantial reduction in tariff can be achieved. The logic is simple 'any
person/entity using electricity must pay the cost' and unless this rule is
followed, neither the operations of utilities can be improved nor the tariff can
be reduced.

Some of the areas in Karachi having
ethnic concentration are notorious for power theft. There is no doubt that
electricity tariff is high but theft is not the solution. It may be true that
some people do not pay but other have to pay even higher - for the units they
consume as well as for the units pilfered. The government must help the KESC in
recovering the outstanding dues and also in removing all sorts of kundas. How
can a company whose 40% production is pilfered survive?

Public representative must also help in
convincing the consumers to pay the bills rather than telling them not to pay
the bills. To make power utilities self-sustaining their cash flow has to be
improved by containing T&D losses. If the rampant theft prevails on adding new
generation capacities, revamping transmission and distribution networks and
above all reducing tariff would not be possible.